Yet a few Unicorns emerged last quarter, despite the challenging
backdrop. And more – including some of the most eagerly awaited,
such as Uber Inc., Lyft and Airbnb – have taken steps to become
public in 1H19.

Overall in 4Q18, 42 companies went public, down about 30% from the
previous quarter and from the year-ago total. Meanwhile, the number
of secondaries issued was down about 15% compared to 3Q and more
than 25% year over year.

Volatility in the U.S. equity markets in spiked in 4Q. Though payroll numbers were strong (suggesting solid economic growth) and
corporate earnings advanced at a 20%-plus clip in the third-quarter
reporting period, investors were concerned about the Federal Reserve
and interest rates, as well as the Trump administration and tariffs. The
VIX volatility index soared in the quarter, from 12 in September to
28 in late December.

The volatile economic and stock market conditions placed a cap
on IPO prices in the quarter. We estimate that the ratio of IPOs
that opened at prices above the issue price compared to IPOs that
opened at or below the issue price was approximately 1.2:1, down
from 2.4:1 in 3Q.

Some of the strongest performances, from a first-day performance
perspective, were from companies launched by Goldman Sachs,
JP Morgan, Morgan Stanley, Barclays Capital and BofA Merrill
Lynch, including:

Guardant Health (GH), with a focus on oncology, which opened
46% above the issue price (JP Morgan, BofA Merrill Lynch);

Anaplan Inc. (PLAN), which provides tools that allow companies
to plan across all areas of the organization and opened 43% above
the issue price (Goldman Sachs, Morgan Stanley, Barclays Capital); and

SI-Bone (SIBN), a Med-tech company focused on back pain, which
opened 40% above the issue price (Morgan Stanley, BofA Merrill Lynch).

The designation of worst-performing IPO went to Mogu Inc.
(MOGU), a fashion and lifestyle company that opened 14% below
offering price. This offering was led by Morgan Stanley, Credit
Suisse and China Renaissance Partners.

Chinese companies continued to access U.S. markets, but the
IPOs from these companies did not have the same strong firstday performance as they did in 3Q. For example, in 3Q, Chinese
companies such as Pinduoduo (PDD), LAIX Inc. (LAIX), 111
Inc. (YI), Qutoutiao Inc. (QTT) and X Financial (XYF), on average opened up 35% above issue price. In 4Q, companies such as
Mogu Inc. (MOGU), the fashion and lifestyle company; Datasea
Inc. (DTSS), a cybersecurity company; and TuanChe Ltd. (TC),
an omni-channel automotive marketplace in China, on average
opened 5% below their issue prices.

Unicorns continued to emerge. During 4Q, three Unicorns came
public on U.S. exchanges. Moderna (MRNA), a biotech company, raised $600 million and is now valued at $4.8 billion, though
the shares opened 4% below the issue price. Tencent Music
Entertainment Group (TME), the Chinese music entertainment
platform, raised $1.1 billion and is now valued at $20 billion; its
shares opened 8% above the issue price. And Anaplan (PLAN),
the software company, is now valued at $3.1 billion and soared
42% above its issue price on opening.

Looking into 2019, we think the market for IPOs is likely to pick
up from the seasonally slow 4Q18. On the positive side: economic
growth, led by the employment environment, appears solid; and
corporate earnings are expected to grow at double-digit rates,
as the dollar stabilizes and oil prices start to recover. The IPO
pipeline remains robust, with about 165 companies having filed
with the SEC and a number of interesting recent filings, such as
Beyond Meat, a developer of plant-based “meats”; Caliburn International Corp., a leading provider of services to U.S. government
agencies; and Virgin Trains, an express passenger rail system in
Florida. We also look for corporations to continue to prune
their business portfolios. As an example, General Electric
has announced that it is preparing to spinoff its Healthcare
subsidiary in an IPO.

More importantly, several blockbuster Unicorns have indicated
that their plan is to come public in the first half of 2019. This list
includes ride-sharing companies Uber, which could be valued as
high as $120 billion; and Lyft, which was most recently valued
at $15 billion. In addition, social network Pinterest, which has
been valued at $12 billion, is reportedly exploring an IPO in
April. Travel company Airbnb and workplace company Slack are
possibilities for 2H19, though both have been exploring listing
directly, like Spotify.

In the tables on the following pages, we highlight select companies
that our team of analysts thinks may be poised to enter the IPO
markets at potentially attractive prices.

John Eade, President, Argus ResearchJasper Hellweg, Security Analyst

Table 1 features the Argus Top 30 Promising Potential IPO candidates. This list has been selected from companies that have
already filed S-1s with the SEC. It is based on factors that Argus
believes are important for success in an IPO, including sales and
earnings growth, clean balance sheet, brand names, attractive
industries and current management/ownership. Stocks on this list
in our last report that debuted in 4Q included: Anaplan (PLAN),
which opened 43% above issue price; SI-Bone, which opened 40%
above issue price; Studio City International (MSC); which opened
32% above issue price; Allogene Therapeutics, which opened
22% above issue price; and Tencent Music Entertainment Group
(TME), which opened 8% above issue price.

Table 2 is our Top 40 intriguing venture-backed private companies, including the Unicorns. This list includes companies in
emerging industries such as Cybersecurity and Big Data analytics,
as well as companies whose investors include well-known groups
such as Kleiner Perkins and Andreessen Horowitz.

Manbang GroupTransportation$6BDeveloper of an mobile app platform that connects truck drivers with distributors. The company’s platform matches truck drivers with shippers who have cargo to move. Investors

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